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? Consulting firms ? Foreign exchange banks ? Trade directories and publications 16 SEIB OF GDUFS The preparation of a transaction ? Studying creditability of the partner Credit reference from ? the local bank or correspondent bank ? business range and annual sales volume ? sales literature and pricelists ? major customers ? business culture 17 SEIB OF GDUFS The preparation of a transaction ? Applying for Export or Import License ? Checking whether the goods to be transacted are within certain export or import controls such as license or quota ? If unable to apply or get the import and export licenses ? The exporter needs to consider to do business under EXW term ? The importer needs to consider to do business under DDP term 18 SEIB OF GDUFS The negotiation of a sales contract ? Two forms of business negotiation ? in words, . facetoface negotiation ? in writing, . business correspondence ? Four main steps involved: ? Enquiry: asking for price by either seller or buyer ? Offer: ? an answer to enquiry or initiated by either seller or buyer ? binding force upon the offerer within the validity ? counteroffer: addition, modification or refusal of the offer ? Acceptance: ? the unconditional acceptance of the offer ? A contract is concluded when an acceptance bees effective 19 SEIB OF GDUFS The negotiation of a sales contract ? Definition: A trade contract is an agreement which is concluded between seller and buyer based on an accepted offer and which sets forth biding obligations of the parties concerned. ? Governing rule: the United Nations Convention on Contracts for International Sale of Goods 1980 (CISG 1980) ? A contract can be formal, informal, simple or plicated, written or oral. 20 SEIB OF GDUFS The negotiation of a sales contract ? A sales contract normally includes: (see Specimen ) ? full name, address and other necessary information of the seller and the buyer ? description of the modity involved, including name, quality, quantity and packaging etc. ? all terms agreed upon, including price, delivery, transportation, insurance, payment, inspection, claims, force majeure, arbitration, etc. ? date on and place at which the contract is signed and the signature of the buyer and the seller 21 SEIB OF GDUFS The negotiation of a sales contract ? Contract vs. confirmation ? A contract is more formal and contains more details than a confirmation ? But equally binding on the parties concerned ? Importance of a written contract ? It is the only document between Seller and Buyer that evidences their respective rights and obligations. ? It serves as the basis for the perf